The pace at which government contractors are engaging in mergers & acquisitions has increased notably in recent years, as a stream of recent stories in the Washington Post and New York Times have reported.

The acquisition of a government contractor frequently provides the buyer an opportunity to increase its market share and/or strengthen its capabilities in an existing industry. The acquisition may also allow the buyer to develop and market a new government contracting capability that was previously lacking from its portfolio.

In the past few months alone, several multi-billion-dollar acquisitions within the government contracts sector have been announced. For example, in September 2017, Northrup Grumman announced it would acquire Orbital ATK, a rocket and defense contractor. Orbital will bring new capabilities to Northrup’s portfolio, including a missile defense business line and the ability to launch rockets that carry satellites into space. The deal, worth $7.8 billion, will also allow Northrup to bolster its existing satellite capabilities.

A group representing 400 services and information technology contractors has asked the Office of Management and Budget (OMB) to revamp several of the 59 changes announced on June 15 in its memo on easing the reporting burden on agencies.

The Arlington, Va.-based Professional Services Council, though supportive in general of the budget office’s bid to trim and update administrative requirements, sent a June 22 letter to OMB Director Mick Mulvaney seeking changes in the Trump administration’s handling of accelerated payments to small businesses, acquisition assessments and reporting of agency priority goals.

“If no one is asking for it, maybe it doesn’t have much value to it,” Mulvaney told reporters during the rollout of the June 15 memo to agency heads targeting a portion of what eventually could be 250 management directives that might be “duplicative, obsolete, redundant or low value.”

In February 2011, the Office of Federal Procurement Policy (OFPP) released a memo called “Myth-Busting: Addressing Misconceptions to Improve Communication with Industry During the Acquisition Process.”

They recognized that agencies were hesitating to meet with vendors out of fear of protests or because they just didn’t have effective strategies to manage these communications. Vendors, on the other hand, had fears of their own, such as inadvertently creating a conflict of interest that would keep them from competing on future requirements.

They held a series of sessions with representatives from all aspects of the acquisition process to get a better sense of everything that was getting in the way of clear communication between the federal agencies and their prospective vendors. Out of those talks, they pulled together the 10 misconceptions they heard most frequently, and gathered them in this myth-busting memo, along with the corresponding fact and a detailed explanation for each point.

You can read the full report in the White House Archives, but here is a summary of the 10 myths and facts, along with my comments. This document may be a few years old, but the myths are still around!

Inside the executive order

The executive order doesn’t change anything just yet. Through the order, Trump calls on all of his administration’s agency heads to:

Evaluate the implementation and compliance of existing Buy America laws under their jurisdictions

Take a look at their waiver process and determine how it is affecting American business.

Come up with additional policies, within the confines of existing law, that “maximize” the use of American-made products and their components, including common construction materials like steel, iron, aluminum and cement.

For purposes of the order, administration officials added that American-made steel means that it is produced in the U.S. from the melting phase forward.

The Pentagon, as the government’s largest buyer of goods and services, is ending a seven-year drawdown of acquisition spending, according to a study released last Wednesday.

“The tide has definitely turned in the direction of contract spending,” wrote a team directed by Andrew Hunter of the Center for Strategic and International Studies.

Defense Department fiscal 2016 contract obligations increased by 7 percent over the previous year, “far higher than predicted,” said the analysis of the outlook for spending on research and development, defense acquisition reform and procurement performance-based data from the Federal Procurement Data System.

Significant boosts in spending commitments were recorded by the Missile Defense Agency, the Air Force and the Navy, “driven primarily by increased obligations for large procurement programs like the C-130J transport aircraft, the KC-45A tanker aircraft, and the Trident II missile program,” CSIS said. “Even the Army, which had declined far more steeply than DoD overall throughout the budget drawdown, was virtually stable between 2015 and 2016.”

The undersecretary of the Army today pledged last week to win the trust of the defense industry as part of a new strategy to rebuild the service.

Karl Schneider said Congress has promised help the Army modernize and grow its end-strength on one condition: the Army must reform the way it does business with the defense industry.

“Maintaining our advantage as the world’s most dominate land force requires that we re-imagine how we work with the defense industry,” Schneider told an audience on Mar. 14, 2017 at the Association of the United States Army’s Global Force Symposium and Exposition in Huntsville, Alabama.

“Our focus must be on providing solutions and solving problems, not simply on checking a list of requirements.”

The General Services Administration’s courtship of the private sector appears to remain very much in the anxiety stage, at least when it comes to its Transactional Data Reporting rule.

The agency sought to calm those apprehensions with a Feb. 7 roundtable outlining the benefits of the acquisition rule — which ditches the requirement that contractors disclose their commercial sales practices in favor of detailed monthly reports outlining all sales made under certain GSA contract vehicles.

The agency rolled out a pilot program to test the rule in August 2016, but despite GSA’s efforts to communicate TDR’s benefits for streamlining acquisition, industry stakeholders attending the roundtable signaled that they were just not that into the measure, yet.

The federal government needs to assess its IT infrastructure and address cybersecurity, modernization and assessment reform as equal, intertwined priorities, suggests the IT Alliance for Public Sector, a division of advocacy and policy organization for the Information Technology Industry Council.

In a letter sent to President-elect Donald Trump, ITAPS declares that its membership — which includes hardware, software, services and solutions companies — is dedicated to working with the new administration to improve government operations and efficiency and reduce wasteful spending on aging inventory. ITAPS hopes that a review of procurement regulations and workaround programs (Digital Services, 18F, DIUx, etc.) will ease barriers to acquiring commercial technologies.

“The federal government spent $80 billion on IT systems last year. Shockingly, 80 percent was spent maintaining costly, vulnerable IT systems that many American taxpayers would expect to see in a Smithsonian collection,” said ITAPS Senior Vice President for Public Sector Trey Hodgkins, who signed the letter to Trump.

Instead of reading this column, you really should be reading Steve Case’s new book, The Third Wave: An Entrepreneur’s Vision of the Future (Simon and Schuster, 2016). Seriously. It’s not only a fascinating view of his experience at the dawn of the Internet age, it’s also a blueprint for how organizations must form partnerships with governments and others if they’re going to succeed in this age of technological innovation.

But since you’re here, I’ll try to make this synopsis worth your while. The wave of which Case writes is one in which the “Internet of Everything” is giving rise to ideas and companies that have the potential to totally disrupt the way we do things. He describes it as “a phase where the Internet will be fully integrated into every part of our lives—how we learn, how we heal, how we manage our finances, how we get around, how we work, even what we eat.”

Case calls it the Internet of Everything instead of the Internet of Things, because the Internet is impacting nearly every aspect of our lives. And it can do so much more. Real time tracking of vital signs, fitness and nutrition has the potential to transform health care and our relationships with our medical care providers. Monitoring student achievement more closely can help us tailor teaching to each student’s needs. And the agriculture industry, already a voracious consumer of data, is on the precipice producing food and ensuring safety in new ways.

Senators John McCain (R-AZ) and Jack Reed (D-RI), the chairman and ranking member of the Senate Armed Services Committee (SASC), recently held a series of very important hearings regarding the need to make fundamental changes to the structure and substance of defense management.

Among those who were called to testify were Arnold Punaro, an influential defense expert who once served as the SASC staff director; Norman Augustine, the widely respected former chairman and CEO of Lockheed Martin Corporation; Dr. Jacques Gansler, a former under secretary of defense for acquisition, technology and logistics; and Michele Flournoy, a former under secretary of defense for policy.

Punaro had numerous observations and suggestions about the need to reduce the Defense Department’s infrastructure and overall overhead, while Augustine and Gansler spoke eloquently about the enduring problems facing the defense industrial base — many the inevitable result of defense acquisition policies that discourage new companies from entering the defense marketplace while simultaneously encouraging many in it to exit, as recently seen in the decision of United Technologies to divest its Sikorsky Helicopter unit.

But, perhaps the most significant observation regarding acquisition came from Flournoy, the former Pentagon policy chief, who noted that it was important that “the federal acquisition regulation (FAR) is not used as a means to prevent industry from being at the table to suggest solutions and inform the debate about what is technologically possible.”